Saturday, April 23, 2011

Obama's Employment Policies Have Failed Because of Quack Economics

I was just reading the recent edition of Gerald Celente's Trends Journal. Celente lives in Kingston, New York, which is about 1/2 hour from my home. Celente makes a good point about unemployment numbers. They don't count the people who have stopped looking for work. Therefore, a more meaningful statistic than the unemployment rate is the employment rate.

Here's some numbers. The employment numbers are as of January while the population numbers are as of July:

Employment is still below what is was following the financial paroxysm of 2008-9. The so-called stimulus package in early 2009 involved Obama's spending nearly a trillion dollars to increase employment. Besides the idea being nonsensical, the Obama administration spent billions on handouts to cronies, including George Soros's Brazilian oil holding. The net effect will be to reduce employment over time. In 2009 the employment rate was about 46.3% (my numbers are off somewhat because I took the employment and population estimates from different months). Today, two years after the Obama stimulus the employment rate is roughly 45.1%, more than one percent lower.

Of course, the Obama administration needs to take responsibility for taking the ridiculous idea of a "stimulus" seriously. As we study in elementary economics, the justification for a stimulus would be that the marginal propensity to consume is lower than the government's ability to spend money. This occurs because consumers save. But American consumers don't save. Moreover, the entire notion of the stimulus is dumb because the spending will cause future taxes to rise, dampening economic growth. It is outrageous that the public has been conned into subsidizing the crackpot theories of Keynesian economists.

The economists who recommended squandering the $800 billion have to bear responsibility for the failure of Obama's policies. They have no more claim to the status of having "scientific knowledge" than do astrologers or fortune tellers. Since economics is a failed profession, we can safely exclude economists from any public office, including the Federal Reserve Bank. Quacks deserve jobs as snake oil salesmen, not on the public dole.

As far as Obama, whatever absurd policies he and his quack advisers have concocted, we can conclude that he is a failure in the economic realm.

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Mitchell Langbert

About Me

I have researched and written about employee benefit issues and in my previous life was a corporate benefits administrator. I am currently associate professor of business at Brooklyn College. I hold a Ph.D. from the Columbia University Graduate School of Business, an MBA from UCLA and an AB from Sarah Lawrence College. I am working on a project involving public policy. I blog on academic and political topics.